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Letter to the editor:

America doesn’t control gas prices

Sun, Apr 1, 2012 (2 a.m.)

In 2008, when we last dealt with $4-a-gallon gasoline, many people were decrying the fact that no new oil refineries had been built in more than 25 years. Fast-forward to 2012 and we find oil refineries being shut down because the U.S. demand for gasoline has dropped by over a million barrels per day. Some of that is due to the recession, but more is due to market forces that increased the demand for fuel-efficient vehicles and the government increasing fuel-efficiency standards for new cars and trucks. During those same four years, not only has domestic crude oil production increased, but we have become a net exporter of finished gasoline and diesel fuels for the first time since Harry Truman’s presidency. In December, we exported nearly 10 percent of domestic consumption.

So why have our gasoline prices risen? There is an international demand for gasoline and the price we pay in the U.S. must match what other countries are willing to pay. Although this is bad news for drivers, it provides some jobs and increases the value of our exports.

Some politicians are clamoring to “drill baby, drill,” and build pipelines to lower gas prices. If we do increase oil production, it will just replace imported oil going to our refineries. But that won’t necessarily decrease the price of gasoline. Anyone running for office who claims they will decrease the price of gasoline had better explain how they intend to control world demand.

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Discussion: 51 comments so far…

  1. An increase in global supply relative to demand will decrease the price. Elementary economics.

  2. World oil prices are costed and paid in US dollars. For the past several years to stimulate the USA economy, Fed Chairman Ben Bernanke printed more dollars increasing the supply of dollars in circulation. This easing called QE1 and QE 2 amounted to trillions of US dollars. A huge immediate criticism of his actions by economists for both QE1 and QE2 was that it would be inflationary and raise the price of oil [hence gas], by devaluing the dollar on the world market. Surprise, surprise. The experts were right. Mr. Bernanke was wrong. His inflationary dollar policies have come home to roost with Americans paying higher prices foir gas at the pump.

    Carmine A. DiFazio

  3. Houstonjac - An increase in global demand relative to supply will increase prices. Elementary economics.

  4. The good citizens of this country are held hostage by POLITICS. We are not privy to the backroom deals that are going on that deeply affect our lives. No matter how we behave, those with the means will always come out on top.

    As we are realizing, no matter how much we cut down our consumption of fuel, utilities, products made from petrochemicals, thinking we are being environmentally smart, economical, and can influence pricing, the Big Oil Product spreadsheet is screeming we are the losers here, only paying some elitest fat cat's lifestyle. BooHooo.

    Blessings and Peace,

  5. Amazing how people don't think for themselves where they beat to the same old liberal hysteria drumbeat.

    There is no supply and demand abroad and their prices in the EU are high only die to the taxes they impose to support their socialists agenda and their wasteful spending on programs enabling their lazy tendencies and lifestyles.

    Oil and gold prices are high due to the weak dollar, Obama spending and the liberal eccoterrorist agenda.

    Prices will plunge when Obama is booted from office and his sick agenda is reversed.

  6. <...when Obama inherited a gasoline price of $1.84>>

    Gas was not $1.84 when Obama was elected. I don't recall paying that low of a price when living in Vegas, and certainly not in 2008.

  7. Politics is like betting on the horses. You pick your favorite based on past performance, breeding, and training. Then you put your money where your mouth is, and watch from the grandstand as the field of horses run with all the givens.

    You can BET crony capitalism played with the bailouts. President Obama put his (really OUR/the Taxpayers) money on his corporate pals, bailing them out as they rode off into the sunset with BIL/TRILLIONS of Taxpayer dollars. Taxpayers are being whipped!

    As Future states, ..."General Electric took a TARP bailout and now made billions yet paid no taxes;..."

    A fine example of bailing out GE, President Obama's buddy Warren Buffet. The list of those who have benefited from bailouts are NOT the everyday little guy citizens, as our plight has not changed in the years President Obama has occupied his elected office.

    The chips are truly stacked against the regular little guy citizen. We are the wage slaves from cradle to grave for those who control the means and politics of industry. That's NO joke.

    Blessings and Peace,

  8. For Bob,RefNv, Tim, and Jerry:

    "Estimates vary for how long currently known oil reserves will last, though they are usually considerably less than 100 years. But the point of this analysis is that it really doesn't matter what the estimates are. There is no way that a supply-side attack on America's energy problem can work.

    The exponential function describes the behavior of any quantity whose rate of change is proportional to its size. Compound interest is the most commonly encountered example -- it would produce exponential growth if the interest were calculated at a continuing rate. I have heard public statements that use ''exponential'' as though it describes a large or sudden increase. But exponential growth does not have to be large, and it is never sudden. Rather, it is inexorable.

    Calculations also show that if consumption of an energy resource is allowed to grow at a steady 5 percent annual rate, a full doubling of the available supply will not be as effective as reducing that growth rate by half -- to 2.5 percent. Doubling the size of the oil reserve will add at most 14 years to the life expectancy of the resource if we continue to use it at the currently increasing rate, no matter how large it is currently. On the other hand, halving the growth of consumption will almost double the life expectancy of the supply, no matter what it is.

    This mathematical reality seems to have escaped the politicians pushing to solve our energy problem by simply increasing supply. Building more power plants and drilling for more oil is exactly the wrong thing to do, because it will encourage more use. If we want to avoid dire consequences, we need to find the political will to reduce the growth in energy consumption to zero -- or even begin to consume less."

  9. Has anyone checked out the global price of oil? I was reading an article on a South African newspaper, the comments were inline with many here. It would seem the price of gas is about $7 to $8 a gallon in Africa and Asia, and they use our prices as a point of reference to complain about. I've seen 5 people on a 90cc motorcycle too many times in the Philippines, they earn about $4 a day, the reason gas is so high there is the same here, Iran, and everyone should know that by now. Time for a Chevy Volt?

  10. Electric cars and alternate forms of energy isn't feasible let along cost efficient in America. It might work for other countries, they're socialist; it won't work here. Americans won't subsidize more dung; we already have been brainwashed into subsidizing the hyphenated Americans and all their programs that sucks a few trillion a year from us annually where we simply don't want to be taxed more to further the liberal agenda..

    The price of fuel is what it is, weak dollar, deficit, spending, and a president that has no clue. I'll stick to my original, when Obama is booted, prices will plunge.

  11. Well, we could always argue about the weather, is Obama responsible for it being too hot or too cold? Of course he is, because "he promised". Will electing a Republican cause the weather to be "Conservative"? (we can't use "moderate" anymore -- for anything.)

    Arguing political responsibility for the price of oil is about as effective as reducing gas prices through prayer meetings. Does anyone really think that changing the party in the White House in a country with about 2% of the world's reserves of oil but that uses 20% of the world's oil will cause the price of gasoline to fall? (They could be right because the last big drop in gas prices in the U.S. [from over $4/gal to about $1.70/gal] happened when we changed from R to D. That ignores the impact of the biggest worldwide economic contraction since the Great Depression -- and some might say that if we change from D to R economic policies we would be right back there free-falling into Depression, AND LOWER GAS PRICES.)

    Has it ever occurred to the "Conservatives" who praise market forces that THE MARKET FOR OIL IS NOT A FREE MARKET. PRICING IN THE OIL MARKET IS CONTROLLED BY A CARTEL. And other major producers go along with the cartel pricing and will not bust it because they use higher oil prices to fund their governments and stay in power. (Russia, Brazil, Iran, Nigeria, Angola and Venezuela all come to mind here).

    If market forces were to actually prevail for oil, then would the price be different? If there is a world market price for oil, then price would be determined by world supply and world demand. What is the evidence that the free market price determined by world supply and world demand would result in lower gasoline prices in Las Vegas? At the moment, world demand seems to be growing faster than world supply so the price pressure would seem to be to the up-side. (When you consider that most of the additional production [e.g. Arctic, oil sands, deep offshore, enhanced recovery techniques] requires higher prices to be produced at a profit, price pressure would seem to be very biased to the up-side.)

  12. If gas consumption in the U.S. decreases, as it has, but increases in the developing world, why would you expect oil companies to lower their prices so that they could market every drop of gas produced here within the United States?

    No one has ever explained to me what incentive an oil company has to take actions that reduce the cost of its product. I remember paying $1.80 for gas in January 2009. I also remember we were losing 700,000 jobs a month back then and also that I paid $4.45 for gas just six months before.

  13. RefNV thinks that Exxon's accounting is honest and directly translates to an individual's budget. And I own a bridge in Brooklyn.

  14. Well, sort of right. I have posted a link to the gas price problems before, not handy now.
    The problem is also were the crude is located, what grade it is and what refinery can process it. Bottom line is modern refineries are needed, CA is desperately short on capacity, affecting Las Vegas, pipelines to move crude to ones that can process it and it would help if there were not so many states with different formulated gas restriction, or at least they all agreed on one or two. It is always supply and demand, perceived or real, and right now supply to the east coast states is in big trouble. Gas in Montana is low because they get Colorado oil and refine it and sell it all in the same area.
    Crude oil is big factor, the weak dollar does make it more expensive. For more on gas see this link from EIA

  15. Here's the deal: Gas prices will go up and they will go down. People will change their driving habits, buy more fuel efficient cars, use alternative means of transportation, carpool, ride a bicycle, walk or whatever it takes to save money on fuel. There is no "problem" with the price of gas in this country. We pay far less than most countries do for a gallon of gas. There is a new paradigm at work here and it ain't "drill baby drill". Get used to a different baseline cost for a gallon of gas: the price has risen, fallen back a few cents, and risen again. This will not change until simple economics takes control: the less demand, the lower the price. This has nothing to do with who the president is or whether we frack/drill ourselves to oblivion. This country's selfish waste of natural resources is coming home to roost. Drive your Escalade or pickup truck if you must (I do), but don't complain about filling your tank.

  16. Regardless prices will keep rising. This is part of the whole, "Let's bring all these other worthless nations to equal standards of living so they can become consumers." but along with that comes increased consumption of oil. What we in Las Vegas should be more upset about is the city planning. How you have to use a vehicle to get anywhere.

  17. Re Jim Reid. Sorry Jim, but a "psychological effect" has nothing to do with the cost of a gallon of gas. Unless you mean that people will freak out and not fill their tank with $4 plus a gallon gas. Supply and demand brother. Until we wean ourselves off of our self righteous belief that we are somehow entitled to cheap gas, the situation will remain the same. My previous post spells it out quite clearly: Drilling/fracking, even if begun today, will not have any immediate impact on oil prices or the price of a gallon of gas. A change in American consumer attitude is the true answer.

  18. So If we were lucky enough to reduce our dependence on foreign oil.The letter writer feels we would still be paying through the nose at the pump. I thought the opposite, that we could control our own price per.gallon without (o.p.e.c.) oil producing and exporting countries. Maybe big oil does not want to stop buying from o.p.e.c. for obvious reasons.

  19. Reffy,

    How truthful has Exxon been? What is their track record?


    Corporations, according to Reffy, never lie.

  20. Reffy,
    Since fossil fuels production and use are inherently polluting and harmful to health I encourage people to move to clean tech. This creates new jobs. If Exxon wants to start being responsible and make such clean tech they need not lose jobs. If they want to continue lying to the public aided and abetted by you why should they continue? You obviously have less faith in the market than I do if you can't see the path to better air and a better life for all. Your myopic vision is typical for conservatives.

  21. Reffy,
    How do you KNOW what was in the air you breathed while running your five miles? Were you near traffic? Because benzene is among the constituents of ICE combustion and it is a known carcinogen. What about VOC's, ozone, SOx, Nox, or particulates under 10 microns in size. The last get inhaled into deep lung tissue where your cilia cannot dislodge them and , over time, can often lead to COPD. Do you think because you can't SEE pollution that there isn't any? See this on just Ozone:

  22. "The air is fine here". Where is here?

    Now let's ignore your completely made up figures on correlation and look at what is going in the science community regarding air pollution and deaths:

    And this would be just a sample. You know Reffy you could actually look up the science but why do that when you KNOW (without any evidence whatsoever) there is no correlation. Nice try at the "*verifiable*" shtick but what is your expertise that would even allow to make a valid judgement about such matters. I mean *verifiable* expertise of course.

    A little sample from my search link:

    "The major air pollutants included in the analysis were ozone, carbon monoxide, nitrogen dioxide, sulfur dioxide, and particulate matter (PM) with an aerodynamic diameter of 10 m (micrometers; PM10) or less and those 2.5 micrometers (PM2.5) or less.
    The researchers conducted a search of the medical literature and identified 34 studies that met criteria for inclusion in the analysis, which indicated associations of statistical significance between all analyzed air pollutants and heart attack risk, with the exception of ozone. The subgroup analysis, based on study quality, yielded results comparable with those from the overall analysis."

  23. Always look to the man int he big white House. His policies and agenda, not to mention his leadership direction, will dictate what we pay for gas. So said Obama in 2007.

    And he was right. Currently we have a leader who wants to support terrorist nations and dictator leaders. So if we were to all ow this country to pump its own oil or buy it from Canada, his buddies would take him to task and Obama has no spine to stand up to them...

    From what little is known about this man, we did learn that most of his ivy league schooling was paid for by an Arab sheik linked to terrorist organizations.

    But like Obama tells us, just because you are life long friends with terrorists, go to school with them, sit int he front row of their church and share vacations with them and even start your political campaign at their homes, doesn't mean you support them or agree with what they stand for.

  24. Reffy makes a claim for passing statistics that is directly contradicted by his ignorant statements about predicting his future. I wonder why he doesn't smoke since he has stated quite clearly that odds don't matter.

    Meanwhile back in the real world:

  25. Reffy,
    Perhaps you might want to think about the problem of progressive effects over time? You act young and invulnerable but time will knock that conceit out of you. Of course anything you write is unverified so go on and tell readers that you are older or whatever you believe will allow you to 'win'. It beats being honest.

  26. Reffy,
    Too bad for you. With such an attitude you will always remain impoverished in thought and deed and suspect for everything you write. In short no rational, reasonable person should trust anything you write here because of your obviously uneducated and paranoid mindset.

  27. Joe, Reggy and Jimmy suffer from Dunning Kruger Syndrome so, by definition, cannot understand how incompetent they are. Post for others to understand but don't expect them to ever have an "aha" moment as it is just beyond their intellectual ability.